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TMI Blog2022 (4) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... tition and stay the further proceedings for the Assessment Year 2013-14; (C) Any other and further relief deemed just and proper be granted in the interest of justice; (D) To provide for the cost of this petition." 4. The facts, giving rise to this writ application, may be summarized as under; 4.1 The writ applicant is a Company incorporated under the Companies Act, 1956. It is engaged in the business of gold and jewellery. 4.2 During the financial year 2012-13 relevant to the Assessment year 2013-14 (i.e. the year under consideration), the writ applicant had made various purchases including the purchase from "Swastik Corporation". It is a case of the writ applicant that such purchase made by it from the "Swastik Corporation" have been duly shown and disclosed in the audited annual accounts. 4.3 The search action under Section 132 of the Act was carried out on 07.08.2013 in the cases of Amar Group of Surat wherein the case of the writ applicant herein was also covered. Later, a notice under Section 153A of the Act was issued by the then Assessing Officer dated 19.08.2014 for the year under consideration. The writ applicant filed its return of income on 20.10.2014 in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objections came to be disposed of by the respondent vide order dated 13.09.2019. 4.10 In such circumstances, referred to above, the writ applicant is here before this Court questioning the legality and validity of the impugned notice issued under Section 148 of the Act, seeking to reopen an assessment which was undertaken under Section 153A of the Act. Submissions on behalf of the writ applicant:- 5. Mr. Tushar Hemani, the learned senior counsel appearing for the writ applicant submitted that the search assessment (i.e., the assessment framed under Sections 153A/153C respectively of the Act) cannot be reopened by issuing a reopening notice under Section 148 of the Act. 6. Mr. Hemani submitted that the legislature has consciously provided for separate schemes, i.e., for the "assessment in case of search or requisition" (under Sections 153A/153C of the Act) as well as 'reassessment" (under Section 147 of the Act). According to Mr. Hemani, both such schemes operate in different scenarios. Mr. Hemani would submit that assessment in the case of search under Section 132 of the Act or requisition under Section 132A of the Act is governed by the provisions of Section 153A/153C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anvassed by him as such is no longer res integra in view of the pronouncement of this very High Court in the case of Cargo Clearing Agency (Gujarat) vs. Joint Commissioner of Income-tax, reported in (2008) 307 ITR 1 (Guj.). Mr. Hemani submitted that Cargo Clearing Agency (supra) considered and discussed the entire scheme as provided under Chapter- XIV-A of the Act. He would submit that in the case on hand, it is the scheme under Chapter-XIV that would be applicable but there is no difference as such between the two schemes. Mr. Hemani would submit that in Cargo Clearing Agency (supra), this Court took the view that once assessment has been framed under Section 158BA of the Act in relation to undisclosed income for the block period as a result of search, there is no question of the Assessing Officer issuing notice under Section 148 for reopening such assessment as the said concept is abhorrent to the special scheme of assessment of undisclosed income for the block period. He would submit that the same principle of law can be made applicable in the present litigation also. 11. Mr. Hemani, for the purpose of making good his case that there is no substantial difference between the two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer to serve a "notice" to the person searched requiring him to furnish "return of income" in the prescribed form and in the prescribed manner. Assessment in case of "other person" S.158BD provides for "assessment" in case of any "other person" (i.e. person other than person searched) in a case where material belonging to such "other person" is found during the course of search. S.153C provides for "assessment" in case of any "other person" (i.e. person other than person searched) in a case where material belonging to pertaining to/ relating to such "other person" as the case may be, is found during search. "Time limit" for framing assessment S.158BE provides for time limit for framing assessment u/s.158BC. Thus, time limit prescribed u/s153 for framing "normal assessment" has been given a go bye. S.153B provides for time limit for framing assessment u/s.153A. Thus, time limit prescribed u/s153 for framing "normal assessment" has been given a go bye. Prior approval of the prescribed superior officer required for passing the order. S.158BG provides that- Order of assessment shall be passed by an AO not below the rank of "ACIT/DCIT/ADIT/D DIT" and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed income escapes assessment, and (2) there is no high pitched assessment, only for the sake of making an assessment. Therefore, it would not be open to Revenue to content that income escaped scrutiny at the hands of two officers, one of them being a superior officer in the hierarchy. If the language of the statute is capable of a plain meaning without doing violence to the language, it is not open to add any words therein so as to give meaning which one or the other side thinks to be move appropriate. Therefore, if reopening is not contemplated, the same cannot be read into the statute. In a situation where there is conflict between the special provisions for search assessment and other provisions of the Act, it will be the special procedure which has to prevail. Once assessment has been framed under section 158BA (S.153A of the present scheme) of the Act in relation to undisclosed income for the block period as a result of search, there is no question of the Assessing Officer issuing notice under section 148 of the Act for reopening such assessment as the said concept is abhorrent to the special scheme of assessment of undisclosed income for block period. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expiry of four years from the end of the assessment year unless there be omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. As already mentioned, 'this cannot be said in the present case. The appeal is consequently allowed; the judgment of the High Court is set aside and the impugned notices are quashed. The parties in the circumstances shall bear their own costs throughout." 16. Mr. Hemani also placed strong reliance on a decisions of this High Court in the case of Fun N Fud vs. GLK Associates, reported in AIR 2020 Guj. 153 for the purpose of explaining the true purport of a non-obstante clause as contained in Section 153A of the Act. The argument of Mr. Hemani is that Section 153A of the Act starts with a nonobstante clause excluding the applicability of provisions of Sections 139, 147, 148, 149, 151 and 153 respectively of the Act. He would submit that if the non-obstante clause excludes the applicability of Section 147 of the Act, then the very issue of notice under Section 148 of the Act for reopening could be said to be without jurisdiction. Mr. Hemani would submit that the non obstante clause i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment or reassessment on the date of initiation of search shall abate, meaning thereby the total income is required to be computed and thereby the total income is required to be computed and there is no computation mechanism, therefore necessarily requiring reference to other provisions of the Act. It is in this context that as per explanation to Section 153A, all other provisions of the Act are required to be made applicable to the assessment made under this section. 4. As per Section 113, tax to be levied at the rate of 60% As per explanation (ii) to Section 153 tax has to be charged at the rate applicable to such assessment year, i.e, normal Tax. 5. "Block Period' Six assessment years 6. Section 158BAAssessment only for undisclosed income Explanation- this assessment in addition to regular assessments. Therefore, two assessments, i.e,. one for regular and asstt. of undisclosed income for the block period. 153-A-proviso- only one assessment in respect of six Ays for undisclosed income found as a result of search, as also in respect of regular income. Second proviso-pending assessment therefore abate. 7. Section 158BB-Special computation provision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mr. Hemani as regards the non obstante clause in Section 153A is absolutely fallacious. Mr. Bhatt would submit that the non obstante clause in Section 153A merely dispenses with the procedural aspect of Section 147 with regard to "reason to believe", "approval" etc. In this regard, Mr. Bhatt invited the attention of this Court to a decision of the Delhi High Court in the case of CIT vs. Anil Kumar Bhatia, reported in (2013) 352 ITR 593 (Delhi), wherein the effect of the non obstante clause as contained in Section 153A of the Act has been elaborately explained. 24. Mr. Bhatt would submit that the assessment under Section 153A will have to be framed under Section 143(3) read with Section 153A/153C as the case may be. He would argue that the decision of this High Court in the case of Cargo Clearing Agency (supra), more particularly, Para-24 therein itself spells out the fine distinction between Chapter-XIV and Chapter-XIV-B. He pointed out that Para-29 of the judgment details the modality of computation which is self-contained in Section 158BB. This, according to Mr. Bhatt, is wholly absent in Section 153A. 25. Mr. Bhatt invited the attention of this Court to Para- 31 of Cargo C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in consequence of or to give effect to any finding or direction contained in the order passed by any authority etc. would also be rendered nugatory. 30. Mr. Bhatt, in support of his aforesaid submissions, has placed reliance on the following case law; (i) Principal Commissioner of Income-Tax-IV vs. Saumya Construction Pvt. Ltd., (2016) 387 ITR 529 (Guj.); (ii) Zinzuwadia & Sons vs. Deputy Commissioner of Income Tax, Central Circle-2(3), (2019) 419 ITR 169 (Guj.) 31. In such circumstances, referred to above, Mr. Bhatt, the learned senior counsel appearing for the Revenue prays that the moot question which has been debated may be answered in favour of the Revenue and against the assessee. ANALYSIS 32. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the law permits the Assessing Officer to reopen an assessment carried out under Section 153A of the Act by issuing a notice under Section 148 of the Act. 33. Section 153A was introduced into the Act by the Finance Act, 2003 w.e.f. 1.6.2003 along with Sections 153B and 153C. Section 153A provides for "assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year." 34. Thus, Section 153A referred to above starts with a non obstante clause relating to the normal procedure which is covered by Sections 139, 147, 148, 149. 151 and 153 respectively in respect of searches made after 31.05.2003. We must try to understand the effect of the non obstante clause as contained in Section 153A so as to appreciate the rival contentions canvassed on either side in this regard. According to Mr. Hemani, the non obstante clause excludes the very applicability of Sections 147 and 148 of the Act and, therefore, an assessment carried out under Section 153A cannot be reopened with the aid of Sections 147 and 148 of the Act. On the other hand, Mr. Bhatt would submit that the non obstante clause in Section 153A merely dispenses with the procedural aspect of Section 147 with regard to the "reason to believe", "approval' etc. Non obstante clause 35. In State of West Bengal v. Union of India, (1963) AIR SC 1241, it is observed as under:- "The Court must ascertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usually applied to give overriding effect to certain provisions over some contrary provisions that may be found either in the same enactment or some other statute. In other words such a clause is used to avoid the operation and effect of all contrary provisions. The phrase is equivalent to showing that the Act shall be no impediment to measure intended. To attract the applicability of the phrase, the whole of the section, the scheme of the Act and the objects and reasons for which such an enactment is made has to be kept in mind." 40. In ICICI Bank Ltd. v. SIDCO Leathers Ltd.,2006 67 SCL 383 (SC), the Supreme Court, at Paragraphs 34, 36 and 37, held as follows: "34. Section 529-A of the Companies Act no doubt contains a nonobstante clause but in construing the provisions thereof, it is necessary to determine the purport and object for which the same was enacted.... 36. The non-obstante nature of a provision although may be of wide amplitude, the interpretative process thereof must be kept confined to the legislative policy.... 37. A non-obstante clause must be given effect to, to the extent the Parliament intended and not beyond the same." 41. The Supreme Court, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of a clear interpretation on a plain and grammatical construction of the words the non-obstante clause cannot cut down the construction and restrict the scope of its operation. In such cases the non-obstante clause has to be read as clarifying the whole position and must be understood to have been incorporated in the enactment by the legislature by way of abundant caution and not by way of limiting the ambit and scope of the Special Rules." 45. In A.G. Varadarajulu v. State of Tamil Nadu, (1998) 4 SCC 231, the Supreme Court relied on Aswini Kumar Ghoses case. The Court while interpreting the non-obstante clause contained in Section 21-A of Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961 held :- "It is well settled that while dealing with a non-obstante clause under which the legislature wants to give overriding effect to a section, the court must try to find out the extent to which the legislature had intended to give one provision overriding effect over another provision. Such intention of the legislature in this behalf is to be gathered from the enacting part of the section. In Aswini Kumar Ghose v. Arabinda Bose, (1952) AIR SC 369, Patanjali Sastri, J. obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns of income for six assessment years (ii) to assess or reassess total income of each of the six assessment years and (iii) not to proceed with any pending assessment or reassessment as on the date of initiation of search as the same would abate. Since some of the provisions contained in the enacting part may come into conflict with the provisions contained in the non obstante clause, these impediments are removed by means of the non obstante clause. Thus, by enacting the non obstante clause in the section, the formalities of issuing notice u/s 139, application of the provisions of section 147, 148, 149 or 151 for reopening a case for escaped assessment, taking of approval from the concerned authorities for reopening the assessment and the time limit for completion of regular assessment have been done away with. Thus, assumption of jurisdiction by the Assessing Officer u/s 153A has been made simple and easy. 50. Section 153A is a self-contained code for each assessments. The section states that on initiation of search, the Assessing Officer can issue a notice calling for the returns of income for six assessment years preceding the previous year in which the search has taken p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clarified that the appeal, revision or rectification proceedings pending on the date of initiation of search under section 132 or requisition shall not abate. Save as otherwise provided in the proposed section 153A, section 153B and section 153C, all other provisions of this Act shall apply to the assessment or reassessment made under section 153A. It is also clarified that assessment or reassessment made under section 153A shall be subject to interest, penalty and prosecution, if applicable. In the assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 65.6 The new section 153B provides for the time limit for completion of search assessments. It provides that the Assessing Officer shall make an order of assessment or reassessment in respect of each assessment year, falling within six assessment years under section 153A within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed. 65.7 This section also provides that assessment in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 153A. 65.10 An appeal against the order of assessment or reassessment under section 153A shall lie with the Commissioner of Income-tax (Appeals). 65.11 Consequential amendments have also been made in sections 132, 132B, 140A, 234A, 234B, 246A and 276CC to give reference to section 153A in these sections. 65.12 These amendments will take effect from June 1, 2003." 52. A perusal of Section 153A as noted above shows that it starts with a non obstante clause relating to the normal assessment procedure which is covered by Sections 139, 147, 148, 149, 151 and 153 respectively in respect of searches made after 31.5.2003. These Sections, the applicability of which has been excluded, relate to returns, assessment and reassessment provisions. Prior to, the introduction of these three Sections, there was Chapter XIV-B of the Act which took care of the assessment to be made in cases of search and seizure. Such an assessment was popularly known as the "block assessment‟ because the Chapter provided for a single assessment to be made in respect of a period of a block of ten assessment years prior to the assessment year in which the search was made. In addition to these t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. [See CIT vs. Anil Kumar Bhatia, (2012) 24 taxmann.com 98 (Delhi)] 54. A question may arise as to how the aforesaid is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either in Section 143(1)(a) or Section 143(3) of the Act. This has been answered by the Delhi High Court in the case of Anil Kumar Bhatia (supra) as under; "If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The position thus emerging is that where assessment or reassessment proceedings are pending completion when the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would also be included, but in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee‟s total income and such orders are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In this latter situation, the Assessing Officer will reopen the assessments or reassessments already made (without having the need to follow the strict provisions or complying with the strict conditions of Sections 147, 148 and 151) and determine the total income of the assessee. Such determination in the orders passed under Section 153A would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be related in different years in which income was earned under block assessment. This is because in such cases, the "block period" is for previous years relevant to 10/6 assessment years and also the period of the current previous year up to the date of the search, i.e., from April 1, 2000, to January 17, 2001, in this case. The essence of this new procedure, therefore, is a separate single assessment of the "undisclosed income", detected as a result of search and this separate assessment has to be in addition to the normal assessment covering the same period. Therefore, a separate return covering the years of the block period is a prerequisite for making block assessment. Under the said procedure, the Explanation is inserted in section 158BB, which is the computation section, explaining the method of computation of "undisclosed income" of the block period. It is now well accepted that this Chapter is a complete code in itself providing for self-contained machinery for assessment of undisclosed income for the block period of 10 years or 6 years, as the case may be. In case of regular assessments for which returns are filed on yearly basis, Section 4 of the Act is the chargi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not relateable to the previous year. On the contrary, it is for the block period which may be 6 years or 10 years, as the case may be. Consequently, as already mentioned, while analyzing the scheme of Chapter XIVB, such Chapter is a complete code in respect of assessments of 'undisclosed income'. Not only it defines what is undisclosed income, it also lays down the block period for which undisclosed income can be taxed. Further, it also lays down the procedure for taxing that income. It is very pertinent to note at this stage that for this purpose, specific provision in the form of Section 158BA(2) is inserted making it a charging section. Thus, a diagnostic of Chapter XIVB of the Act leads to irresistible conclusion that it contains all the provisions starting from charging section till the completion of assessment, by prescribing special procedure in relation thereto, making it a complete Code by itself. Looking it from this angle, the character and nature of 'undisclosed income' referred to in Chapter XIVB becomes quite distinct from 'total income' referred to in Section 5. It is of some significance to observe that when a separate charging section is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be assessed separately as income of a block of specified years. The assessment for the block period is to be made by an officer not below the rank of Assistant Commissioner of Income Tax with the prior approval of the Commissioner of Income Tax. The assessment is of the income of the block period consisting of previous years relevant to 10/6 assessment years preceding previous year in which the search was conducted u/s. 132 of the Act, and includes, in the year in which the search was conducted, the period upto the date of commencement of such search. The salient features of the block assessment scheme for determining undisclosed income can be stated thus :- [a] A single Notice is required to be issued u/s. 158BC of the Act for the entire block period of 10/6 years going backward from the year of search, plus the broken period of the year of search ending on the date of search. This saves the Assessing Officer from being required to obtain prior approval of the higher authorities for initiation of assessment/reassessment proceedings for past years falling within the block period. [b] Under the first Proviso below clause (a) of section 158BC of the Act it is provided that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn three classes of cases wherein it shall also be deemed to be a case where the income chargeable to tax has escaped assessment. Proviso to section 147 of the Act stipulates that no reassessment proceedings shall be commenced after the expiry of four years from the end of the relevant assessment year in a case where assessment has been framed u/s. 143(3) of the Act or u/s. 147 of the Act for the relevant assessment year, unless income has escaped assessment for such assessment year by reason of failure or omission to either file return u/s. 139 of the Act, or in response to Notice u/s.142(1) or section 148 of the Act, or to disclose fully and truly all material facts necessary for the assessment of that assessment year. [b] Under section 148 of the Act, the Assessing Officer is required to serve on the assessee a Notice requiring the assessee to furnish within the prescribed period a return of income, but even before issuing such Notice u/s. 148 of the Act, the Assessing Officer is mandated under sub-section (2) of section 148 of the Act to record reasons. The return of income which an Assessing Officer may call for from an assessee is in relation to income which has escaped as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment and includes the regular assessment or reassessment if pending. The income in regular assessment and undisclosed income are included in the assessment under Section 153A. 61. Under Section 158BB of the Act, the undisclosed income of the block period shall be the aggregate of the total income of the previous years falling within the block period computed in accordance with the provisions of this Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence as reduced by the aggregate total income or as the case may be as increased by the aggregate of the losses of such previous year, determined as provided thereunder. In Paras-19,20 and 21 of Cargo Clearing Agency (supra), the Court has set out reasons as to why the legislature does not intend to reopen a block assessment. Paras-19,20 and 21 reads thus; "19. Section 158BB of the Act provides for modality of computation of undisclosed income of the block period. Such undisclosed income of the block period has to be the aggregate of the total income of the previou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 158BH of the Act has limited application. 21. Time limit for completion of block assessment has been provided in section 158BE of the Act. It indicates that the same has to be within one year/two years from the end of the month in which the last of the authorisations for search under section 132 of the Act was executed etc. For the present, it is not necessary to refer to the other provisions of the said section. However, Explanation 2 as appearing in section 158BE of the Act gives an indication as to what would be the date on which an authorisation shall be deemed to have been executed. Under clauses (a) and (b) of Explanation 2 different points of time have been specified. But in no case, can one envisage the applicability of period of limitation prescribed under section 153 of the Act for completion of assessments and reassessments. The Revenue cannot contend that for the purpose of reassessing the so called escaped undisclosed income revenue will resort to the limitation under section 153 of the Act, because undisclosed income has to be assessed in the manner provided and by adopting the procedure provided in Chapter XIV-B of the Act. Nor is it possible to resort to limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving been framed under Chapter XIV-B of the Act by adopting the special procedure prescribed by the said Chapter is to contend what is inherently not possible. It cannot be a case of non filing of return considering the provisions of section 158BC of the Act. It cannot be a case of non disclosure of material facts considering the fact that everything which was undisclosed has already been unearthed at the time of search and the definition of "undisclosed income" itself indicates that not only what has been seized or recovered, but even income or property which has not been or would not have been disclosed for the purpose of the Act has been roped in. Furthermore, section 158BB of the Act also provides for not only for requisition of Books of Accounts or other documents, but on the basis of evidence found as a result of search and such other materials or information as are available with the Assessing Officer, undisclosed income of the block period shall be computed. Therefore, even if, assuming for the sake of argument, some income has not been disclosed in the return furnished under section 158BC of the Act, the Assessing Officer is bound to assess all undisclosed income after pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be, as increased by the aggregate of the losses of such previous years, determined,- (a) where assessments under section 143 or section 144 or section 147 have been concluded, on the basis of such assessments; (b) where returns of income have been filed under section 139 or section 147 but assessments have not been made till the date of search or requisition, on the basis of the income disclosed in such returns; (c) where the due date for filing a return of income has expired but no return of income has been filed, as nil,. (d) where the previous year has not ended or the date of filing the return of income under sub- section (1) of section 139 has not expired, on the basis of entries relating to such income or transactions as recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition relating to such previous years; (e) where any order of settlement has been made under sub- section (4) of section 245D, on the basis of such order; (f) where an assessment of undisclosed income had been made earlier under clause (c) of section 158BC, on the basis of such assessment. Explanation.- For the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e computation of such income as a consequence of such inquiries. However, insofar as the assessment or reassessment under Section 153A/153C of the Act is concerned, all that the section says is that in a case of a person where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132A, the Assessing Officer shall issue notice to such person to furnish the return of income in respect of each of the six assessment years; and assess or reassess the total income of six assessment years. Thus, what we have noticed is that there is no provision akin to Section 158BB which provides for the computation of income on the basis of the material and information gathered during the inquiries made after the search proceedings. In the aforesaid context, Para-25 of Cargo Clearing Agency (supra) is also relevant. We quote Para-25 as under; "25. As already noted hereinbefore, the entire scheme for bringing to tax income which has escaped assessment under sections 147 to 153 of the Act specifically relates to a specific assessment year and different time limits are provided at different stages which are all inter-linked and commenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principles of interpretation also do not permit such an exercise. Xxx As already noticed hereinbefore, the entire scheme under Chapter XIV of the Act, more particularly from Sections 147 to 153 of the Act pertaining to reassessment, and the special procedure for assessing the undisclosed income of the block period under Chapter XIV-B of the Act are not only separate and distinct from each other, but if an effort is made to incorporate the scheme under Chapter XIV of the Act for the purpose of assessment of the block period there is a conflict between the provisions which becomes apparent on a plain reading. In the circumstances, as per the established rules of interpretation, unless and until, a plain reading of the two streams of assessment procedure does not result in the procedures being independently workable, only when the question of resolving the conflict would arise. But to the ontrary, in the present case, in the light of the provisions of Section 158BH of the Act, once there is a conflict between the two streams of procedure, as laid down by the Apex Court, the provisions of Chapter XIV-B of the Act shall prevail and have primacy. Thus, viewed from any angle, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3D fall within the Chapter XIV which provides for the 'procedure for assessment'. Thus, these provisions do not fall under a separate chapter. 5) There is no provision akin to section 158BH which says that save as otherwise provided in this Chapter, all other provisions of this Act shall apply to assessment made under this Chapter. 70. In the aforesaid context, the judgment of this High Court in the case of Zinzuwadia & Sons (supra) assumes importance. We quote the relevant observations; "17. Insofar as the contention that the additions have been made on the basis of the material found during the course of survey and not during the course of search is concerned, the learned counsel for the respondent has placed reliance upon the decision of the Supreme Court in Commissioner of Income Tax, Chennai v. S. Ajit Kumar, (2018) 404 lTR 526, wherein it has been held thus: "15. The power of survey has been provided under Section 133-A of the IT Act. Therefore, any material or evidence found/collected in a survey which has been simultaneously made at the premises of a connected person can be utilised while making the block assessment in respect of an assessee under Section 158-BB rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f law were raised by the Revenue while questioning the legality and validity of the order passed by the Appellate Tribunal; "(A) Whether the order of Tribunal is right in law and on facts in deleting the addition made in assessment made u/s 153A of the Act? (B) Whether the Tribunal is right in law in holding that the addition should be based on the incriminating material found during the course of search under new procedure of assessment u/s 153A which is different from earlier procedure u/s 158BC r.w.s. 158BB of the Act and by reading into the section, the words 'the incriminating material found during the course of search' which are not there in section 153A? (C) Whether the Tribunal erred in relying on the ITAT order in Sanjay Aggarwal Vs. DCIT (2014) 47 Taxmann.Com 210 (Del) which has interpreted undisclosed income unearthed during the search to imply incriminating material, as against the finding of the Delhi High Court in Filatex India Ltd. Vs. CIT-IV (2015) 229 Taxman 555 (Delhi) wherein it is held that during the assessment u/s 153A additions need not be restricted or limited to incriminating material found during the course of search?" 72. After a detaile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h under section 132 or requisition under section 132A, as the case may be, shall abate. Sub-section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub-section (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A of the Act. Similarly, subsection (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of the Act is annulled in appeal or any other proceeding. 16. Section 153A bears the heading "Assessment in case of search or requisition". It is well settled as held by the Supreme Court in a catena of decisions that the heading of the section ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The debate on the pivotal issue may also be looked into and understood from a different angle. In the case on hand, the Assessing Officer seeks to reopen the assessment for the assessment year 2013-14. The search was carried out on 07.08.2013. As a result of the search, notice under Section 153A of the Act was issued by the Assessing Officer on 19.08.2014 for the year under consideration. The Assessing Officer framed the assessment vide order dated 28.03.2016 under Section 143(3) read with Section 153A of the Act. The consequence of notice under Section 153A (1) of the Act is that the assessee is required to furnish fresh return of income in each of the six assessment years in regard to which a notice has been issued. It is this return which is filed consequent to the notice which would be subject of assessment by the revenue for the first time in the case of abated assessment proceedings. Consequent to the notice under Section 153A of the Act, the earlier return that may be filed for the purpose of assessment which is pending would be treated as non est in law. Further, section 153A (1) of the Act itself provides that on filing of the return consequent to the notice, the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions was also the builder and interior decorator who had constructed and decorated the assessee's residential house at Seaward Road, Valmiki Nagar, Thiruvanmiyur. The cost of this investment was disclosed to the Revenue department in the course of regular return filed by the assessee. In the course of survey operation, it was learned that Elegant Constructions had received payment in cash in addition to cheque payment and both cash and cheque payments were recorded in the books of Elegant Constructions. However, the books of accounts of the assessee showed only cheque payment. It was found that the assessee had paid a sum of Rs. 95.16 lakh in cash which was not accounted for. The Assessing Officer, vide order dated August 31, 2004, after having regard to the facts and circumstances of the case, completed the block assessment and, inter alia, held that the said amount is liable to tax as undisclosed income of the block period. Aggrieved by this order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). 80. The main contention was whether the material found in the course of the survey in the premises of the builder could be used in Block Assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court in CIT vs. Hotel Blue Moon, reported in (2010) 321 ITR 362 (SC). We are referring to this decision because the same has been relied upon in the case of Ajit Kumar (supra). The Supreme Court has observed as under; "12. Chapter XIV-B provides for an assessment of the undisclosed income unearthed as a result of search without affecting the regular assessment made or to be made. Search is the sine qua non for the Block assessment. The special provisions are devised to operate in the distinct field of undisclosed income and are clearly in addition to the regular assessments covering the previous years falling in the block period. The special procedure of Chapter XIV-B is intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. It is not intended to be substitute for regular assessment. Its scope and ambit is limited in that sense to materials unearthed during search. It is in addition to the regular assessment already done or to be done. The assessment for the block period can only be done on the basis of evidence found as a result of search or requisition of books of accounts or documents and such other materials or infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of the search or other post-search material or information available with the Assessing Officer which can be related to the evidence found. This, however, does not mean that the assessment under Section 153A can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. The question, however, is whether the seized material can be relied upon to also draw the inference that there can be similar transactions throughout the period of six years covered by Section 153A. We have to remember that with the advent of Section 153A we are taken back to the pre-chapter XIV-B situation, where assessments were made on the basis of material and evidence collected during search.
(c) To say that the assessment undertaken under Section 153A of the Act can never be reopened under Section 147 of the Act, would be an incorrect statement of law.
90. The matters shall now be placed for further hearing so as to determine on facts whether any case has been made out by the Revenue for the purpose of reopening of the assessments undertaken under Section 153A of the Act. X X X X Extracts X X X X X X X X Extracts X X X X
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